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Managing Debt: The Holistic Approach, vol. 2

By Chris Black

CLICK HERE for the previous installment. Enjoy!

Next, work your vendors (sorry, advertisers.) Squeeze every possible drop of savings out of them. A big part of that is knowing who you’re dealing with. Those big vendors with plenty of cash flow don’t necessarily need distributor-level order to cut you a better deal. They value the regularity of a long-term partnership, something you can offer even at the lowest level. The smaller vendors, on the other hand, are often sitting on large swathes of inventory that they need to make liquid. They’re the ones with whom you go big, stocking up on as much as a year’s worth of inventory at once to get bare-bottom rates that double your margins. Obviously, only do that on things you know will sell. It’s only a good deal if it’s something that will make you money.

Now, it’s time to increase your revenue. This is how you lower fixed costs, albeit in percentage only. For example, say your rent is $5,000 a month and your average monthly revenue is $50,000. That means your rent is 10% of your monthly earnings. Now, what if you can get that up to $100,000? You just dropped your rent cost down to 5%. This sounds like a no-brainer, but ask yourself, are you truly doing everything you can?

Get social. Everyone has a Facebook and Instagram page, yes. But what about the dozens of other online methods your customers use to find you? The list is in the hundreds; Google, Bing, Yahoo, Yelp, Facebook, BBB, Merchant’s Circle,  Linkedin, YP,  White Pages, Super Pages, Yellowbook, City Pages, City Search . . . you get the point. Spend one hour a night on each of these, claiming them, enhancing your pages, cleaning up the spam and troll reviews, etc. If each of these pages gets you even one new customer each month, you’re looking at a solid hundred or more customers each month. It’s such a simple concept, it almost seems too easy.

Be a good community citizen. Don’t just be another local wookie with a business card that goes home and gets stoned with his or her friends. I sell pipes and dildoes to baseball moms just because I coach their kids. Put yourself out there. The more you integrate yourself into your community, the more you’ll attract your community’s business. Not to mention, those relationships will go a long way to prevent that dreaded day when Johnny Law comes knocking.

Finally, it’s time to talk about existing debt. If you’ve followed all the previous cost-cutting and revenue-generating steps, this part will be a helluva lot easier. Tackle your debt head-on and avoid debt restructuring scams; if it’s too good to be true, well, it’s too good to be true.

Focus on credit cards over bank loans and prioritize high interest loans first. Interest rates are at an all time low, so with most bank loans, you’re better off putting extra money into things that generate revenue than trying to pay down your debt quickly. Now, don’t be stupid. Stay on top of that payment; just don’t deprive yourself of the opportunity to double up your money just to pay down a loan that’s only costing you a few points in interest.

Approach credit card companies yourself and negotiate. Trust me, they’d rather deal with you than a middleman who’s going to strongarm them with threats of default. One effective method is to call your credit card company and ask to speak with someone in customer retention. I once took this approach, telling them I wanted a better deal and ended up getting refunded on four months’ worth of interest. Next, maneuver your credit card when you can. If you have decent credit, you can often find cards that offer zero interest for 12 months. Transfer your debt to one of these and use all available revenue to pay it down interest-free. Again though, be smart, negotiate and read between the lines to make sure you’re getting the deal you think you’re getting. The Devil is in the details.

That’s the short of it, folks. The long of it would require publishing a book, something I plan to eventually do when I’m not up to my ears in the daily tasks of running a business. Admittedly, I’m not a professional financial adviser or a CPA. I’m just a guy who took $10,000 at the age of 19 and grew it into a multimillion dollar enterprise over the course of 18 years. Trust me when I say I know the debt game. Have you ever been hit by the IRS with $100,000 in back taxes because your accountant failed to do their job? Well I have. And guess what? I paid it off in six months. Meanwhile, I still have my business, my home that comfortably houses my wife and five children (along with the inground pool) and both of my Porsches. I did that because I played it smart, learned from my mistakes and followed these steps. More succinctly, I pursued wisdom over mere knowledge and it paid off.

Helpful Hint: Don’t assume that ‘going direct’ will always get you the best price. I know that probably flies in the face of everything you think you know but trust me on it. A manufacture has a vested interest in ensuring his product isn’t devalued. Often, you’ll get a better deal with a distributor than a manufacturer. True story.

Profitable Practice: At the end of each day, evaluate every action you have taken and determine specifically how it went toward increasing your bottom line. I do it every day of the week and you should too. You can rest on the weekend. Or when you’re dead.

About the Author: Chris Black is the owner of the wildly successful Munson’s Emporium in Belton, Texas, the husband of former Blackball Distribution star, Wanda Black, the father of five children and the founder and admin of the Facebook forum, Smoke Shop Owner’s Society, a community of 1,300 industry professionals and growing. When not at work, Chris enjoys spending time with his family, coaching his son’s baseball team, working on his Porsche and viciously trolling those of lesser intelligence on social media.

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